The Zhitong Finance App learned that Dongwu Securities released a research report saying that the upward cycle of construction machinery in the last round is 2016-2020. According to the 8-year service life, the last round of sales equipment is already in a large-scale life span replacement period. 2023 is the low life span replacement point. Starting in 2024, the number of updates will begin to rise year by year, and the industry beta will rise marginally. Domestic sales of excavators achieved positive growth in March-April, and improved during the peak season, exceeding market expectations. With the increase in demand for updates and the decline in the base figure in the second half of the year, the industry is expected to usher in a new round of renewal cycles. A series of policies such as large-scale equipment updates will boost the industry's recovery, and will resonate with the dual cycle of “large-scale equipment updates+industry self-renewal”.
The bottom of the construction machinery industry is marginally rising, and investment value is gradually showing. Comprehensive enterprise competitiveness and valuation situation, we continue to recommend Sany Heavy Industries (600031.SH), Xugong Machinery (000425.SZ), Zhonglian Heavy Industries (000157.SZ), Hengli Hydraulic (601100.SH), Zhejiang Dingli (603338.SH), and it is recommended to focus on Liugong (000528.SZ), Shantui (000680.SZ), Weiwan Seal (301161.SZ), Changling Hydraulic (), Foster 605389.SH (301446.SZ) etc.
Domestic sales of excavators exceeded expectations by +13% year-on-year in April, and the industry ushered in resonance at home and abroad
The main sales data for construction machinery in April is as follows: ① Excavators: Sales of 18,822 excavators of various types in April, with domestic sales of 10,782 units, +13.3% year over year, which is significantly better than previous CME expectations (previous expectations were the same year on year); exports of 8040 units, down 13.2% year on year, and the decline narrowed month-on-month. ② Loaders: In April, the industry sold 9779 loaders, an increase of 0.89% over the previous year. It sold 5,309 units in the Chinese domestic market, up 0.91% year on year, and the growth rate began to correct; export sales volume was 4,470 units, up 0.86% year on year. In April, 940 electric loaders were sold, and the electrification rate was 9.61%.
Looking forward to the future, domestic sales of excavators accounted for about 30% of domestic sales throughout the year, and the year-on-year increase in March-April surpassed market expectations. Starting in May, the upward inflection point for domestic sales was already evident. Looking at overseas markets, the overseas market space for construction machinery in 2023 was about 3 times that of the domestic market. The export growth rate was under phased pressure due to last year's high base, but leading categories and the European and American markets broke through smoothly. The competitiveness of domestic brands is prominent, and the overall growth stage is steady. The industry has resonated with domestic and foreign markets, and the annual growth rate is expected to rise month by month from a slight decline to flat or growing.
The Ministry of Housing and Construction issued a notice to renew and eliminate construction machinery and equipment that has been in use for more than 10 years
The Ministry of Housing, Urban-Rural Development issued the “Notice on the Implementation Plan for Promoting the Renewal of Construction and Municipal Infrastructure Equipment”, which clearly proposes to renew and eliminate construction machinery and equipment that has been in use for more than 10 years. In 2023, domestic standard holdings of excavators, loaders, forklifts, and rollers each accounted for 19.79%, 37.84%, 13.35%, and 23.78% of the total ownership of all types in 2023. With the implementation of large-scale equipment renewal policies, it is expected that 70% to 80% of old equipment will be eliminated, and 20%-30% of old equipment will generate trade-in demand.
Risk warning: downstream investment falls short of expectations; industry cycle fluctuations; international trade disputes.